Kubota Pharmaceutical : Consolidated Financial Results for the Three Months Ended March 31, 2021(under IFRS)

Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

May 13, 2021

Consolidated Financial Results

for the Three Months Ended March 31, 2021

(under IFRS)

Company name:	Kubota Pharmaceutical Holdings Co., Ltd.
Listing:	Tokyo Stock Exchange
Securities code:	4596
URL:	https://www.kubotaholdings.co.jp/en/
Representative:	Ryo Kubota, Representative Executive Officer, Chairman, President and Chief
	Executive Officer
Inquiries:	Hiroki Maekawa, Chief Financial Officer
Telephone:	[phone]

Scheduled date of the submission of quarterly securities report:	May 13, 2021
Scheduled date to commence dividend payments:	-
Preparation of supplementary material on quarterly financial results:	Yes
Holding of quarterly financial results presentation meeting:	None

(Yen amounts are rounded to the nearest million, unless otherwise noted.)

1. Consolidated financial results for the three months ended March 31, 2021 (January 1, 2021 to March 31, 2021)

(1) Consolidated operating results (cumulative)	(Percentages indicate year-on-year changes.)
		Revenue				Operating profit		Profit before tax		Net profit
Three months ended	Millions of yen		%		Millions of yen		%		Millions of yen	%		Millions of yen	%
March 31, 2021	0		-			(686)		-		(697)	-		(697)	-
March 31, 2020	0		-			(741)		-		(713)	-		(713)	-
	Profit attributable to		Total comprehensive		Basic earnings per		Diluted earnings per
	owners of parent			income			share			share
Three months ended
Millions of yen		%		Millions of yen		%			Yen			Yen
March 31, 2021	(697)		-			(412)		-			(15.48)			(15.48)
March 31, 2020	(713)		-			(759)		-			(16.87)			(16.87)
(2) Consolidated financial position
							Total shareholders'	Equity attributable to	Ratio of equity
		Total assets		attributable to owners
							equity			owners of parent	of parent
As of		Millions of yen	Millions of yen	Millions of yen		%
March 31, 2021				6,549				5,803		5,803			88.6
December 31, 2020				6,692				5,993		5,993			89.6

2. Cash dividends

		Annual dividends per share
	First	Second		Third		Fiscal		Total
	quarter-end	quarter-end		quarter-end		year-end
	Yen	Yen		Yen		Yen		Yen
Fiscal year ended December 31,	-	0.00		-		0.00	0.00
2020
Fiscal year ending December 31,	-
2021
Fiscal year ending December 31,		0.00		-		0.00	0.00
2021 (Forecast)
(Note) Revisions to the forecast of cash dividends most recently announced: None

3. Consolidated earnings forecasts for the fiscal year ending December 31, 2021 (January 1, 2021 to December 31, 2021)

(Percentages indicate year-on-year changes.)

	Revenue			Operating profit	Profit before tax	Net profit
Full year	Millions of yen			%		Millions of yen	%	Millions of yen	%	Millions of yen		%
10			(73.5)		(2,900)	-	(2,800)	-	(2,800)		-
	Profit attributable to		Basic earnings per
	owners of parent		share
Full year	Millions of yen			%			Yen
(2,800)			-			(62.84)

(Note) Revisions to the earnings forecasts most recently announced: None

* Notes

1. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change in scope of consolidation): None
   Newly included: None
   Excluded: None
2. Changes in accounting policies and changes in accounting estimates
3. 1. Changes in accounting policies required by IFRS: None
   2. Changes in accounting policies due to other reasons: None
   3. Changes in accounting estimates: None
4. Number of issued shares (ordinary shares)
5. 1. Total number of issued shares at end of the period (including treasury shares)

As of March 31, 2021	45,316,688 shares
As of December 31, 2020	44,558,588 shares

(ii) Number of treasury shares at end of the period

As of March 31, 2021	70 shares
As of December 31, 2020	70 shares

1. Average number of shares outstanding during the period (cumulative from the beginning of the fiscal year)

For the three months ended March 31, 2021	44,996,576 shares
For the three months ended March 31, 2020	42,295,790 shares

• Quarterly financial results reports are exempt from quarterly reviews conducted by certified public accountants or an audit corporation.
• Proper use of earnings forecasts, and other special items
  The earnings forecasts and other forward-looking statements contained in these materials are based on information currently available to Kubota Pharmaceutical Holdings Co., Ltd. (the "Company") and on certain assumptions deemed to be reasonable by the Company. Actual business performance and other results may differ substantially due to various factors. Please refer to "1. Qualitative Information Regarding Financial Results for the Three Months ended March 31, 2021, (3) Explanation of consolidated earnings forecasts and other forward-looking statements" on page 4 of the attached materials for matters relating to earnings forecasts.

	Kubota Pharmaceutical Holdings Co., Ltd. (4596)
	Consolidated Financial Results for the Three Months Ended March 31, 2021 (under IFRS)
Attached Material Index
1. Qualitative Information Regarding Financial Results for the Three Months ended March 31, 2021........	2
(1)	Explanation of operating results.........................................................................................................	2
(2)	Explanation of financial position........................................................................................................	3
(3)	Explanation of consolidated earnings forecasts and other forward-looking statements.....................	4
2. Condensed Quarterly Consolidated Financial Statements and Significant Notes Thereto ........................	5
(1)	Condensed quarterly consolidated statements of financial position...................................................	5
(2)	Condensed quarterly consolidated statements of profit or loss and condensed quarterly consolidated
	statements of comprehensive income.................................................................................................	6
(3)	Condensed quarterly consolidated statements of changes in equity...................................................	7
(4)	Condensed quarterly consolidated statements of cash flows..............................................................	8
(5)	Notes to condensed quarterly consolidated financial statements........................................................	9
	Notes on going concern assumption...................................................................................................	9
	Significant subsequent events.............................................................................................................	9

- 1 -

Kubota Pharmaceutical Holdings Co., Ltd. (4596)

Consolidated Financial Results for the Three Months Ended March 31, 2021 (under IFRS)

1. Qualitative Information Regarding Financial Results for the Three Months ended March 31, 2021

1. Explanation of operating results
   The Kubota Pharmaceutical Group (the "Group") is an ophthalmic medical solutions company specializing in the field of ophthalmology that conducts research and development of drugs and medical devices globally.
   In the global economy during the three months ended March 31, 2021, the outlook remains uncertain due to the further spread of the novel coronavirus disease (COVID-19) and other factors.
   In this market environment, the Group proceeded with research and development as follows.
   Small molecule compounds
   With regard to emixustat hydrochloride ("emixustat"), we started a phase 3 clinical study for Stargardt disease in November 2018, and the study is currently ongoing across 29 sites in 11 countries worldwide. For the clinical study, the subjects were randomly assigned to a group receiving emixustat or a group receiving a placebo at a 2:1 ratio. Emixustat (10 mg) or the placebo was administered orally once a day for 24 months. The primary endpoint is to determine if emixustat reduces the rate of macular atrophy progression in subjects with Stargardt disease (juvenile macular degeneration) and the secondary endpoints include changes in visual function parameters, such as best-corrected visual acuity (BCVA) letter score and reading speed.
   Although the initial target for the study was 162 subjects, the Group increased the number of enrolled subjects to 194 in light of the impact of the spread of COVID-19 and other factors. The enrollment of the last subject was completed in April 2020 (U.S. time).
   The phase 3 clinical study was selected for the Orphan Products Clinical Trials Grants Program by the U.S. Food and Drug Administration (FDA) in August 2020. The total amount of grants to be provided from this grants program will be up to $1.63 million (approximately ¥170 million) over three years. The Group recorded a total of ¥57 million as other operating income for the previous fiscal year, which was the first year of the grants. It expects to record a similar amount in the current fiscal year, but no such income was recorded in the three months ended March 31, 2021.
   Emixustat received orphan drug designation as a new drug candidate for treating Stargardt disease from the FDA in January 2017 and from the European Medicines Agency (EMA) in June 2019.
   Prior to our ongoing phase 3 clinical study for Stargardt disease, the Group conducted a phase 2 clinical study for emixustat targeting proliferative diabetic retinopathy in the fiscal year ended December 31, 2017. Analysis of this clinical study suggests that emixustat may improve macular edema, but a phase 3 clinical study would be a large-scale clinical study requiring substantial research and development funding. As the Group believes it would be difficult to proceed independently, it is exploring the possibility of joint development with partner companies.
   Medical devices
   The Patient Based Ophthalmology Suite (PBOS) is a remote retinal monitoring device that makes it possible to check the condition of patients' retinas at their home. Since the initial prototype was completed in July 2020, we have continued to improve its functions and are exploring the possibility of joint development and commercialization with partner companies while making software improvements, such as 3D imaging capabilities using artificial intelligence (AI).
   The Group is also working with the National Aeronautics and Space Administration (NASA) to develop a compact optical coherence tomography (OCT) device that can be carried on a manned mission to Mars. Phase 1 of the project was completed in April 2020. Discussions regarding the details of Phase 2 of this project continue, but the timing of its commencement has not been decided.
   The Group is also developing wearable myopia control devices aimed at treating and controlling the progression of myopia utilizing Kubota Glass technology, the Group's original active stimulation technology. In 2020, a proof-of-concept (POC) clinical study using a desktop device and wearable device demonstrated that axial length (the distance from the cornea to the retina) decreased in the test eye compared to the control eye. The Group completed an initial prototype in December 2020, and is currently continuing product development toward early commercialization, clinical studies aimed at obtaining more evidence and other activities.

- 2 -